ShoPP accepts online orders for shopping bag under the brand name Borong. The following is information related to its operation for the month of December 2021:

RM

Sales (7,100 units @ RM35) 248,500

Variable costs per unit:

Direct material 7

Direct labour 3

Factory overhead 5

Fixed costs per year:

Factory overhead 9,200

Marketing and administration 11,300

Based on the above information, answer the following questions:

1. Explain the meaning of contribution margin. Then, determine the contribution margin per unit and contribution margin ratio for Borong. (6.0 mark)

2. Calculate the break-even point for Borong in unit and RM.(3.5 mark)

3. Explain what margin of safety is. Then, determine the margin of safety for Borong in unit and RM. (5.0 mark)

4. The management plans to increase the sales activities to gain a target profit of RM31,500. Determine the total bags that need to be sold in order to achieve the managements target. (2.0 mark)

5. Due to inflation, ShoPP will increase the selling price by RM33 and the variable cost per unit will also increase by 20%. Calculate the new break-even point for Borong in unit and RM. (7.5 mark)

6. Elaborate how this cost-volume-profit analysis could assist ShoPP in managing its daily operation. (6.0 mark)